How media coverage of corporate social responsibility and irresponsibility influences cross‐border acquisitions

• Published in: Strategic management journal 2021-01, Vol.42 (1), p.58-83
• Main Author: Hawn, Olga
• Format: Article
• Language: English
• Subjects: Acquisition; Analysis; Borders; Companies; Completion; Corporate social responsibility; corporate social responsibility (CSR); Customers; Delayed; emerging market multinationals (EMMs); Emerging markets; Inappropriateness; international expansion; M&As; Media coverage; public takeover process; Quantitative analysis; Social activities; Social aspects; Social responsibility
• ISSN: 0143-2095; 1097-0266
• DOI: 10.1002/smj.3212

Research Summary This study contributes to the growing strategic corporate social responsibility (CSR) literature by examining the intersection of acquisition studies and international expansion research and highlighting the unexplored impact of media coverage of CSR and corporate social irresponsibility (CSI) in shaping completion and duration outcomes of cross‐border acquisitions. A quantitative analysis of 4,087 cross‐border acquisition announcements by firms from Brazil, Russia, India, China, and South Africa (1990–2011) shows that while media coverage of CSR is not important, media coverage of CSI is associated with lower likelihood of and longer duration till acquisition completion. By theoretically and empirically distinguishing media coverage of CSR from CSI, this paper pushes the existing literature to acknowledge these distinct concepts and their varying effects. In sum, managers should beware media coverage of CSI when acquiring abroad. Managerial Summary Cross‐border acquisitions by firms from emerging markets often do not reach completion or are badly delayed, damaging the firms' attempts to expand. A key barrier to completing deals is that employees, customers, regulators, media, and other stakeholders in the target market are suspicious of these firms, fearing that they will be poor corporate citizens. I examine whether media coverage of acquirers' social activities helps overcome these suspicions. I find that media coverage of socially responsible activities does not facilitate deal completion. Strikingly, however, media coverage of irresponsible actions, such as labor or environmental issues, delays or blocks deal completion. The implication is that firms from emerging markets, which increasingly are expanding abroad, need to avoid activities that people outside their country will interpret as inappropriate.